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The Textiles & Clothing Business especially for apparel end-use is extremely complex to manage not only due to its fragmented nature, but also because it is driven by very short & fast changing fashion cycles. Stake holders in this business should understand the sanctity of the timelines and the high stakes and high risks involved at each stage of the value chain.
Understanding your Product and Manufacturing capabilities:
In any manufacturing business, the product and its manufacturing process is inseparable. It is easy to understand the product if you know how it is made.
Learn thoroughly the technicalities and cost breakup of the product you manufacture.
Understand the sanctity of timelines required by the customer for the sampling and the subsequent bulk orders.
Make sure that you have the manufacturing and business processes setup to meet the timelines required by the customer.
You have to be right the first time, as there is no ‘slack time’ available to make the second attempt for repairs or re-runs.
Due to the nature of business being of ‘fast fashion with short shelf life’, any delays could lead to customer penalties and loss of repeat business.
Customers do not measure you on how hard you tried, but on what actually you deliver.
Plan your Product and Customer mix:
Today, most of the apparel fabric processing mills face severe pressures to:
1. Reduce costs.
2. Process small orders.
3. Reduce lead times.
Planning operations and selecting the type of customer mix for your organisation becomes extremely important in the above environment.
It is important to have a proper blend of large and small orders. Generally, larger the order size lower is the margin and vice-a-versa.
Now a days, more often than not, the order sizes do not match the economical lot sizes on the production shop-floor. Plan your operations to club the processing of similar orders together, thereby generating minimum amount of Fresh Surplus. Today, the biggest value loss is contributed by this category of production in the apparel fabric business.
Your product portfolio should be a blend of:
1. Standard Basic products,
2. Fashion Items and
3. Customer specific orders.
Orders can be classified into two types.
1. “First make and then sell” and
2. “First sell and then make”.
Standard Basic items / Forecast fashion items will fall in the first order type of First Make & Then Sell. These items are generally called JIT (Just in Time).
JIT items are always manufactured on a forecast by business development team and kept ready in the warehouse. They can be dispatched to the customer at short notice and with no minimum order size requirements.
Allocation of suitable amount of working capital towards investment in the JIT inventories should be planned. If your team develops good fashion forecasting capabilities, these items which generally fetch a premium price in the market, will certainly compensate for the extra inventory carrying costs.
Fashion business is seasonal in nature. In textiles, you generally have a ‘slack period’ of 4 months in a year. The order flow from the customers is not consistent throughout the year.
Therefore opting for a strategy to have JIT items in your product basket, significantly helps in stabilizing the consistent production flow on the shop-floor during these slack months.
You can suitably change the product mix more towards JIT orders during these slack months. This will ensure that your plant capacity utilization remains at optimum levels throughout the year.
Understanding your Customer needs
You can segment the customers as per profitability they bring to your company.
Identify which product and service attributes the customer values. Within the same market, different customers may value different things:
1. Some look for the lowest possible price,
2. Others look for a dedicated service relationship, and
3. Some others look for the best technology or reputed brand or a specific attribute.
4. It becomes more complicated, when customers don’t know exactly what they are looking for. This happens quite often. You should be prepared for such situations.
Set up processes for identifying products or services that customers may not always know that they need. Your efforts will yield positive results over a period of time. The customers appreciate these initiatives and develop confidence in your partnership. You become the first choice to partner them in any of their new projects. They will give you the first right of refusal before offering to the same to your competitors.
Most companies assume that their products and services meet the needs of their customers. But surprisingly few actually test this assumption. Establish processes to make sure that you truly understand what your customers’ value.
Scan the competition and find answers to the following questions:
1. Why the customer should buy from you?
2. What is the extra value you can offer over the competition?
Drive Innovation:
Today in the fashion business, the customers expect from their suppliers:
1. Excellent product design capability,
2. Choice of different price points for a similar product,
3. Quick and unrestricted quantity of sampling.
Build a team of best available Creative and Enthusiastic minds in your design studio. This is extremely important in today's environment. Unfortunately few companies realize the importance of this, as most of them are busy copying & making what customers give them to make.
Demonstrate your innovation capabilities by making seasonal collections. Forecast upcoming fashion trends and give ideas to your important customers, what they should be putting on their shelves in the upcoming season.
Ensure all products meet the technical performance parameters standards stated by the customer, as well the ones unstated by the customer. Remember, you are an expert in your field of fabric manufacturing and not your customer.
It is needless to say that invest in sufficient sampling capacities to handle seasonal peak loads of:
1. New design samples created by your design cell for seasonal collections.
2. Sample yardages ordered by the customers.
3. Sample yardages required for collaborative design projects of the priority customers.
Periodically review if you need to invest in marginal additional production capacities, to de-bottleneck the existing ones. This has become a necessity in today’s times, due to consistent reduction in order sizes and ever changing fashion demands from the market.
Build a shell of innovation & service barrier around your organisation to serve your priority customers and shield your organisation from the onslaught of cheap competition.
Build your reputation & customer loyalty:
It is hard to build a good reputation. Capabilities, which are built up over a period of time are often difficult to copy. Position your business to serve the needs of certain customers better than others.
Customer should get convinced that you excel in innovation and deliver the products with right product and delivery integrity.
When you have high customer retention rate, your brand starts acquiring fame through word of mouth from your satisfied customers.
Pricing Strategy:
It is very important to know for yourself, where your reputation and brand sits in the market.
If you sit at the premium end of the market, your customer will pay a high price for an item of great (perceived) value. In such a case, your brand commands an inspirational value where the customers feel proud in declaring that they source from you.
If you are perceived as a low-end, even if your products are premium, customers would hesitate to pay higher prices due to lack confidence.
Coordinate very closely with both the product development teams at your end, as well as that at the customer’s end. Design & develop products that meet customer expectations on price and creativity.
Focus on long-term relationships with the customer. Cater to their needs, choose quality inputs, and at the same time make your products affordable. They will definitely pay reasonable price once they see the value in your product and services. This require perseverance in marketing.
Customer Selection:
Marketing is about actively selecting and targeting the right kind of customers. Try to build your organisation around customers who value your products and services.
Do not just go on a customer acquiring spree. If you take on anyone and everyone as a customer, you will face a problem one day.
Not all customers are good customers. Some customers are more trouble than they are worth.
The wrong customers will push you into “selling cheap or selling out”.
A bad customer will distract you and waste your time. This will in-turn de-focus you in giving the best service to your priority customers.
Since the apparel value chain is fragmented, it is important to put a system in place to periodically evaluate not only your customers, but also their nominated intermediate vendors (garment factories). Slowly but subtly weed out customers or their intermediate vendors which are not worth dealing. Such customers are:
1. Pain to serve.
2. Do not respect and value your products.
3. Invariably find faults with your product & services.
4. are always on a look out to extract penalties by lodging frivolous claims.
5. They are rude to your employees.
6. Do not pick up the goods on time.
7. Never pay on time.
In any business, customer churn is inevitable. But a lost customer leaves many important lessons for us.
One must do a proper root cause analysis to find out what made them leave. This learning must then be leveraged for giving better service to the existing customers as well as deciding the selection criteria for the new customers.
Build Sales & Marketing Team with right attitudes:
The ability to find a customer, sell your product to that customer, satisfy the customer with excellent service and making him buy from you again, should be the central focus of your marketing team.
Every member of your sales team should have conviction in the product and feel proud about representing the organisation.
Sales team must refrain from bad-selling through over-promises or even worse, selling with a lack of complete knowledge of the product. They must know the product in and out, so that they can state its capabilities clearly to the customers.
Keep-in close touch with your sales team, not only because they are your eyes & ears in the market, but to identify and immediately get rid of team members who do not show the right set of attitudes. An incompetent sales manager can significantly harm your organisation. Most common symptoms are:
1. They do not have confidence or pride in selling your product.
2. They will misguide and distract the other team members.
3. They will portray a wrong picture to hide their incompetence & non-performance by either blaming:
a. the production or creative design team,
b. raise doubts on the product integrity, or worse
c. as a last resort, blame the customers’ integrity.
Such guys can spell doom for your organisation’s reputation in a very short span of time.
The sales team should be live to the current order queuing position at the production floor, so as to not over commit the deliveries to the customers.
Inculcate in them the courage to politely but assertively say “No” to a customer, in case you cannot deliver the product in time.
Build teamwork between sales and product development teams for effective coordination on the pre-production sample approvals / sign-offs from the customer. This will ensure smooth production flow and timely deliveries.
In case there is default on the promised product & delivery integrity, resulting in losses at the customer’s end, do not hesitate to be assertive with your management to compensate such losses and amicably settle the issue with the customer.
Ensure and strive for timely payments from the customer, as cash flows are the life line for any business.
Developing & building the attitudes on the above lines in your organisation, will certainly help you build an outstanding business reputation in the market with an enviable customer base.
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